Sunday, 29 March 2009
Currency futures gain allure amid volatile prices
Currency futures are showing signs of becoming the most attractive alternative asset class in the UAE so far in 2009, led by continued price volatility and a focus on currency risk hedging strategies, said Malcolm Wall Morris, chief executive officer of the Dubai Gold and Commodities Exchange (DGCX).
"The ongoing volatility in the currency markets will continue to encourage market participants to hedge their exposure to foreign currencies. From a long-term perspective, currency futures are especially beneficial to both individuals and commercial entities with investments abroad or those who are planning to invest abroad," he said.
Since the start of 2009, 147,000 currency futures contracts have traded on DGCX, valued at $9.4 billion (Dh34.5 billion). This compares with 53,000 and $4.6 billion during the same period last year, representing a 104 per cent growth in the value of contracts traded for the currencies product range.
"The ongoing volatility in the currency markets will continue to encourage market participants to hedge their exposure to foreign currencies. From a long-term perspective, currency futures are especially beneficial to both individuals and commercial entities with investments abroad or those who are planning to invest abroad," he said.
Since the start of 2009, 147,000 currency futures contracts have traded on DGCX, valued at $9.4 billion (Dh34.5 billion). This compares with 53,000 and $4.6 billion during the same period last year, representing a 104 per cent growth in the value of contracts traded for the currencies product range.
Saudi Arabia's bourse regulator probing 92 cases
Saudi Arabia's bourse regulator is probing 92 cases of suspected violations including price manipulation and improper disclosure, the regulator's chief said in remarks published on Saturday.
"There are 92 cases in the phase of subpoenaing and interrogation," Okaz newspaper quoted Abdul-Rahman Al Tuwaijri, chairman of the Capital Market Authority (CMA), as saying.
The cases are among 151 cases registered last year which involve suspected manipulation, misleading, and irregular disclosures and trading, he said.
"There are 92 cases in the phase of subpoenaing and interrogation," Okaz newspaper quoted Abdul-Rahman Al Tuwaijri, chairman of the Capital Market Authority (CMA), as saying.
The cases are among 151 cases registered last year which involve suspected manipulation, misleading, and irregular disclosures and trading, he said.
Risk appetite extends to emerging market as equity funds spiral
The appetite for chasing higher risk and bigger returns increased last week as flows into emerging market equity funds hit a year-to-date high, a new research has revealed.
Emerging markets bond funds snapped a 10-week losing run and high-yield bond funds had their second best week of 2009 as investors regained more of their appetite for risk during the fourth week of March.
Money market funds, which are generally used by risk-averse investors, posted a third consecutive week of outflows and index funds geared to US equities surrendered $4.5 billion (Dh16.5bn) as more money found its way into actively managed equity and fixed-income funds, according to data released by EPFR Global.
Emerging markets bond funds snapped a 10-week losing run and high-yield bond funds had their second best week of 2009 as investors regained more of their appetite for risk during the fourth week of March.
Money market funds, which are generally used by risk-averse investors, posted a third consecutive week of outflows and index funds geared to US equities surrendered $4.5 billion (Dh16.5bn) as more money found its way into actively managed equity and fixed-income funds, according to data released by EPFR Global.
Bahrain Mumtalakat delays plan to increase foreign investments
Bahrain's sovereign wealth fund has delayed by a year plans to increase foreign investments to almost half its total assets and would instead focus on assets at home, chief executive said.
Bahrain Mumtalakat Holding announced in April plans to diversify its portfolio by raising foreign investment to 50 per cent from more than two per cent.
"The implementation of that strategy has been slowed down," Talal Al Zain told Meed magazine.
Bahrain Mumtalakat Holding announced in April plans to diversify its portfolio by raising foreign investment to 50 per cent from more than two per cent.
"The implementation of that strategy has been slowed down," Talal Al Zain told Meed magazine.
Gulf sovereign wealth funds see further fall
The global financial distress has inflicted heavy losses on state funds from the Gulf oil heavyweights and their assets will likely erode further in 2009 because of low oil prices, according to a US study.
Even if oil prices averaged around $75 (Dh275.49) in the next few years, the asset portfolio of the sovereign wealth funds (SWFs) in the region could still suffer as high public spending means little surplus will be left for those funds, said the study by the New York-based Council on Foreign Relations (CFR).
In a working paper by two of its experts, CFR said the assets of those funds, especially the Abu Dhabi Investment Authority (Adia), had largely been overstated, estimating Adia's funds at below $300 billion.
Even if oil prices averaged around $75 (Dh275.49) in the next few years, the asset portfolio of the sovereign wealth funds (SWFs) in the region could still suffer as high public spending means little surplus will be left for those funds, said the study by the New York-based Council on Foreign Relations (CFR).
In a working paper by two of its experts, CFR said the assets of those funds, especially the Abu Dhabi Investment Authority (Adia), had largely been overstated, estimating Adia's funds at below $300 billion.
Derivatives growth outpaces equities
While equity volumes on Nasdaq Dubai see-saw, derivatives trading has seen phenomenal growth this year.
This month till date, the number of derivative contracts rose to 4,536 over February's 386 contracts, which had grown 329 per cent over January.
Analysts attribute this to key factors such as larger institutional participation and the hedging mechanism inherent in derivative products.
This month till date, the number of derivative contracts rose to 4,536 over February's 386 contracts, which had grown 329 per cent over January.
Analysts attribute this to key factors such as larger institutional participation and the hedging mechanism inherent in derivative products.
Zain to delay London listing until next year
Zain, Kuwait's largest company by market capitalisation, will delay its listing plans until next year, Emirates Business has learned.
According to Dr Saad Hamad Al Barrak, Deputy Chairman and CEO of Zain Group, the telecommunications group is putting the listing plan on hold until a more favourable time.
"We were planning in 2009 but because of the international crisis we are putting this on hold," he said. "We are ready to be listed in London's (London Stock Exchange) GDR listing however we'll wait for a more favorable time. We hope it's within 2010, maximum."
According to Dr Saad Hamad Al Barrak, Deputy Chairman and CEO of Zain Group, the telecommunications group is putting the listing plan on hold until a more favourable time.
"We were planning in 2009 but because of the international crisis we are putting this on hold," he said. "We are ready to be listed in London's (London Stock Exchange) GDR listing however we'll wait for a more favorable time. We hope it's within 2010, maximum."
Boeing keen on emirate’s plans
After seeing European firms strike deals with Abu Dhabi over aerospace manufacturing, Boeing, the largest US aerospace business, is “very interested” in finding ways to fit into the emirate’s development plans.
Boeing believes there are potential synergies in creating joint ventures with firms including Mubadala Development, an investment company owned by Abu Dhabi, for aviation education, training, manufacturing and technological development.
“They clearly want to move forward with economic diversification in aerospace,” said Paul Kinscherff, the newly installed president of Boeing Middle East in charge of promoting Boeing commercial and military aircraft in the region.
Boeing believes there are potential synergies in creating joint ventures with firms including Mubadala Development, an investment company owned by Abu Dhabi, for aviation education, training, manufacturing and technological development.
“They clearly want to move forward with economic diversification in aerospace,” said Paul Kinscherff, the newly installed president of Boeing Middle East in charge of promoting Boeing commercial and military aircraft in the region.
Saudi market catches up on good news
Saudi investors yesterday responded to last week’s rally in global markets by lifting the Tadawul 2 per cent from Wednesday’s close.
The Saudi market was closed during the rally on world exchanges on Thursday and Friday. Having watched from the sidelines as signs of vigour emerged in global equities and oil prices, buyers yesterday raised the Tadawul for the 11th straight session. The index is up almost 15 per cent since March 11.
“I believe Saudi investors are responding to some of the good news in the global markets and economy that we have heard since Wednesday evening, when the Saudi markets were closed,” said Udo Schaeberle, the director of private clients in the Gulf for the German wealth management company BHF Bank.
The Saudi market was closed during the rally on world exchanges on Thursday and Friday. Having watched from the sidelines as signs of vigour emerged in global equities and oil prices, buyers yesterday raised the Tadawul for the 11th straight session. The index is up almost 15 per cent since March 11.
“I believe Saudi investors are responding to some of the good news in the global markets and economy that we have heard since Wednesday evening, when the Saudi markets were closed,” said Udo Schaeberle, the director of private clients in the Gulf for the German wealth management company BHF Bank.
MGM’s $200m ‘sign of good faith’
Dubai World describes a last-minute US$200m (Dh734.6m) payment by MGM Mirage for the CityCenter project in Las Vegas a “sign of good faith”.
The payment temporarily ensured that construction would continue on the $8.8bn casino and property project, which has fallen victim to the global shortage of credit and a drop in gambling in the US.
CityCenter is a 31-hectare project that includes several casinos, hotels, a new retail complex and other office and residential buildings on the Las Vegas Strip. It has been reported to be the largest privately financed construction project in the US.
Investors take heart from Dubai court ruling
The Dubai Property Court is emerging as a champion of the small investor following its inaugural ruling last week, lawyers say.
On Monday, the Property Court ruled that Mizin, a development arm of the government-owned investment company Tatweer, had to pay back Dh7.4 million (US$2m) and 9 per cent interest to an investor because Mizin did not register the transaction with the Dubai Land Department within 60 days under a new law.
The ruling has triggered discussion among investors and lawyers who believe the court is planning to take a literal interpretation of laws relating to the property sector, which could mean many investors getting their money back.
On Monday, the Property Court ruled that Mizin, a development arm of the government-owned investment company Tatweer, had to pay back Dh7.4 million (US$2m) and 9 per cent interest to an investor because Mizin did not register the transaction with the Dubai Land Department within 60 days under a new law.
The ruling has triggered discussion among investors and lawyers who believe the court is planning to take a literal interpretation of laws relating to the property sector, which could mean many investors getting their money back.